City cheers latest GEC deal

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The Independent Online
GEC, THE defence and electronics giant, yesterday completed another major element in its corporate restructuring by paying pounds 700m to take full control of GPT, its telecoms equipment joint venture with Siemens of Germany.

The deal comes weeks after GEC unveiled the pounds 800m takeover of US defence electronics group Tracor. It means that Lord Simpson, managing director, has now implemented much of the strategic overhaul he drew up after arriving 19 months ago.

GEC, which already owned 60 per cent of GPT, is paying Siemens pounds 610m in cash for its 40 per cent stake in the business. GEC is also handing over its 50 per cent stake in another joint venture, the private systems business Siemens GEC Communications Systems.

The deal will be paid for out of GEC's pounds 1.5bn cash mountain, which was swollen by a further pounds 1bn early this month through the sale of a majority stake in its power engineering and rail joint-venture company, Alstom.

Lord Simpson said the immediate aim was to grow GEC's telecoms interests through a series of acquisitions and partnerships. GPT, which specialises in public network systems, smart technology payphones and systems integration, made profits in the year to 31 March 1997 of pounds 172m on sales of pounds 1.17bn.

GPT will be integrated with GEC's existing wholly-owned telecoms business, Marconi Spa, to form a new company, Marconi Communications, which will have total sales of pounds 1.5bn. Lord Simpson said it would concentrate on growth areas of the market such as data transmission and intelligent networks. There will also be synergies with the mainstay of the group, the defence electronics business GEC Marconi.

The City greeted the deal positively, marking GEC's shares up 5.5p to 483p. They have risen by 17 per cent since the wave of deal-making began three months ago.

Lord Simpson said GEC was still interested in making further defence acquisitions in the US.

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